The Quick Read: Your maximum new loan is a percentage of your home’s appraised value, and that percentage depends on three things. Those are the type of refinance, how you use the property, and how many units it has. A refinance that takes little or no cash out can reach 95% to 97% on a one-unit home you live in. A cash-out refinance on that same home tops out at 80%. Two- to four-unit homes, second homes and investment property step down from there, subject to lender guidelines and full file review.
Key Takeaways
- Loan-to-value (LTV) is the new loan divided by the home’s value. Equity you keep is the leftover slice.
- A rate-and-term refinance allows much more leverage than a cash-out refinance on the same home.
- Cash-out is 80% on a one-unit primary residence and 75% on two- to four-unit homes, second homes and investment property.
- Mortgage insurance applies above 80% LTV, so the line you land on changes your monthly budget.
- A second mortgage or home equity line (HELOC) can push you over the limit even when the first mortgage looks fine. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
What Does LTV Actually Measure on a Refinance?
LTV is the new first mortgage divided by the home’s value. That’s the whole formula.
Refinance savings and break-even estimate
The starting figures are an example value with a balance in proportion and a placeholder for costs. Replace them with yours, and enter the current rate from your statement.
Editable benchmark: 7.32% as of October 22, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not a refinance quote.
Illustrative starting assumptions: a $350,000 home value, a $245,000 current balance, a current rate you enter and a remaining term seeded at twenty-five years, closing costs seeded at $5,000 as an editable placeholder (not a fee quote) and rolled into the new loan, a thirty-year term at the current Freddie Mac benchmark, and property taxes and insurance estimated at typical national rates. Every field is editable.
Illustrative estimate only — not a Loan Estimate, approval, quote, or commitment to lend. The new rate field carries the weekly Freddie Mac thirty-year conventional benchmark, a market reference and not a refinance quote; a refinance is priced by the lender at lock, and the current rate, the remaining term and the closing costs are figures you enter. The current payment is estimated from the balance, the current rate and the remaining term; the break-even divides the closing costs by the monthly saving and ignores the interest effect of a longer term. On the VA IRRRL the funding fee is added to the loan unless the veteran is exempt. Taxes and insurance are editable estimates. Licensed in sixteen states for consumer mortgages; Lendmire is a broker, never the lender.
Fannie Mae's Selling Guide says the maximum LTV depends on the credit score, the product type, the number of units and the occupancy. It also states a rounding rule that surprises people. The result is truncated to two decimals, then rounded up to the next whole percent. So 94.01% is treated as 95%.
Two details trip up borrowers more than any others.
- Financed closing costs count. If you roll costs into the new loan, the balance grows and so does the LTV. That can push you over a threshold by a hair.
- Appraisal sets the denominator. A lower appraisal shrinks the maximum loan at any fixed cap. Same cap, smaller loan.
Sometimes the automated underwriting system offers a value acceptance, which is an appraisal waiver. A lender can take it when offered, but it's never something to count on.
The Refinance Types the Lender Sorts You Into
Every conventional refinance lands in one of two buckets, and the bucket decides your row. Across the conventional loan programs Lendmire arranges through wholesale lenders, this classification is the first thing that gets checked.
Rate-and-term (limited cash-out). The new loan pays off your existing first mortgage and closing costs. It can also pay off a second lien that was used to buy the home. You get only incidental cash back. Fannie Mae calls this a limited cash-out refinance. Freddie Mac calls it a no cash-out refinance. Same idea, different label.
Cash-out. The new loan pays off your mortgage and lets you take equity for any purpose. Fannie Mae's cash-out rules also allow it to pay off subordinate liens of any age.
Here's the catch. Paying off a second mortgage that was not used to buy the home turns the whole deal into a cash-out refinance. A borrower who thinks they're doing a simple rate-and-term can end up on the 80% line without noticing why.
The Master Matrix: Your Row, Your Ceiling
Find your occupancy and unit count, then read across. These are the program figures Lendmire works with, subject to lender guidelines and full file review. Fannie Mae publishes the underlying limits in its Eligibility Matrix.
| Property use | Rate-and-term (limited cash-out) | Cash-out |
|---|---|---|
| Principal residence, 1 unit | 95% (up to 97%, see below) | 80% |
| Principal residence, 2–4 units | Set by the agency matrix | 75% |
| Second home | Set by the agency matrix | 75% |
| Investment property | Set by the agency matrix | 75% |
The 97% figure applies only where the existing loan is agency-owned and the first-time-buyer program allows it. It also needs a fixed rate and a one-unit home you occupy.
On the three non-one-unit rate-and-term cells: this page states only the figures Lendmire's wholesale programs confirm for those rows, and for rate-and-term that is the one-unit principal residence. The other rows follow the occupancy ladder: the less you live in the home, the less leverage you get. Your exact number comes from the Fannie Mae matrix linked above, applied to your file by the lender.
Two reading tips. First, the matrix has more columns than this table, including credit score tiers and fixed versus adjustable rates. Your score can lower the ceiling. Second, Freddie Mac's cash-out page lists the same property types: one- to four-unit primary residences, second homes and investment property. The two agencies differ at the edges, so a lender may steer your file toward one or the other.
Why the Ceiling Steps Down
The logic is risk. Lenders and agencies assume a borrower defaults on a rental or vacation property before the home they sleep in. A duplex has a tenant to manage. A second home is the first bill to skip in a bad year. So the agencies ask you to keep more equity as the risk climbs.
Cash-out steps down for a separate reason. Pulling equity out leaves a thinner cushion and signals the borrower wanted liquidity. That's why even a one-unit home you live in drops from 95% to 80% when cash comes out.
Picture it as a ladder. Rate-and-term on your own single-family home sits at the top. Cash-out on a duplex you live in sits several rungs lower. Cash-out on a second home or investment property sits on the same low rung as that duplex, at 75%.
How Do Second Mortgages and HELOCs Count?
Your first-mortgage LTV is not the only number checked. Lenders also compute a combined figure, and the details matter.
- CLTV (combined LTV) adds the drawn part of any HELOC and the balance of any closed-end second mortgage to the new first mortgage.
- HCLTV (home equity combined LTV) counts the full HELOC credit line, drawn or not, per Fannie Mae's HCLTV rules.
So an open, undrawn HELOC can push HCLTV over the limit while CLTV looks fine. Freddie Mac uses different labels (TLTV and HTLTV) but the same arithmetic.
If you keep a second lien in place, the new first mortgage has to fit under the limit alongside it. If the second stays and a new or larger one appears before closing, the file gets re-underwritten. Paying it off or closing the line is often cleaner. Just remember the cash-out trigger described earlier.
From Cap to Loan: A Worked Example in Percentages
The cap is not the cash. Run it in three steps on a one-unit home you live in.
1. Start with value. Say the appraisal comes in at 100% of what you expected.
2. Find the ceiling. A cash-out refinance on this home tops out at 80% of value.
3. Subtract what you owe. Say your payoff, plus financed closing costs, equals 62% of value. The most you could take as cash is roughly 18 points of value, before anything else is deducted.
Now change one input. The appraisal comes in 5% lower than expected. The 80% ceiling now applies to a smaller number, and your payoff and costs are a bigger share of it. Your room shrinks from about 18 points of the old value to about 14. A low appraisal costs you twice.
Run the same exercise on a duplex you live in. The ceiling is 75%, so the same payoff leaves less room. The math doesn't change. Only the row does.
Mortgage Insurance and the 80% Line
The 80% mark matters beyond eligibility. Mortgage insurance is required above 80% LTV. At or below it, you generally don't carry it.
Here's how it ends, in plain terms. Under the Homeowners Protection Act, you may request cancellation when your balance reaches 80% of the original value. That requires a good payment history, no subordinate liens and no decline in value. The CFPB's compliance bulletin lays out those conditions. The servicer must terminate it automatically at 78%.
A refinance resets the clock, because the new loan has a new original value. Published typical annual premiums run from 0.58% to 1.86% of the balance. That's a range, not a quote. Your actual cost depends on your file.
One wholesale lane Lendmire places files with reaches 89.99% LTV with no mortgage insurance. It requires a 680 score, a 50% ratio ceiling, a thirty-year fixed rate, a primary residence, a conforming balance and its own six months of seasoning. It's narrow, but it exists. In Texas, a cash-out on the homestead is capped by the state constitution at the agency figure, and that lane is not written there. Final terms depend on lender guidelines, property type, leverage, and the borrower's complete credit picture.
Seasoning: The Cash-Out Waiting Period
Seasoning is the time the existing loan or ownership has been in place before a lender will refinance it. It applies to cash-out only.
For a conventional cash-out refinance, the mortgage being paid off must be at least 12 months old, measured note date to note date. At least one borrower must have been on title for six months. Limited cash-out refinances don't carry the 12-month rule.
The exceptions are specific. Delayed financing covers a recent cash purchase that's documented and arm's-length. Inheritance and legal awards have their own treatment. Lendmire's piece Conventional Cash-Out Refinance Reserves by Occupancy and Unit Count covers the savings side of the same file.
Where the General Rule Breaks
The matrix gives you the rule. These cases are where it bends.
- The 95.01% to 97% limited cash-out. It needs a fixed rate and a one-unit primary residence that every borrower occupies. It also needs automated underwriting and an existing loan owned or securitized by the agency. Adjustable-rate and high-balance loans are not permitted.
- Community second-lien programs. A special program can allow combined leverage above 100%. It's not permitted on cash-out refinances, second homes or investment property.
- Adjustable versus fixed. The top limited cash-out ceiling is higher for fixed than for adjustable.
- Manufactured homes. They carry separate, lower limits. The standard table excludes them.
- Co-ops. Co-op share loans don't allow investment property or second-home cash-out.
- Non-occupant co-borrowers. If you lean on their income, the allowed ratios drop.
- Co-owner buyout. A limited cash-out can buy out a co-owner after an inheritance or divorce.
- Listed for sale. A cash-out can't go forward if the home is listed at disbursement.
- Temporary buydowns. Cash-out refinances can't carry one.
- Construction-to-permanent. A single-closing loan is processed as a purchase or limited cash-out. A two-closing loan is processed as limited cash-out or cash-out.
- Freddie Mac's 95% multi-unit change. It raised the ceiling on certain purchases and no cash-out refinances for two- to four-unit primary residences. Cash-out refinances did not get the increase.
A lender can also layer its own stricter overlays on top. The agencies set the ceiling, not the floor. The credit floor in the wholesale conventional programs starts at a 620 decision score. The automated finding governs most files, with a total ratio ceiling of 50%. Lendmire's piece Conventional Cash-Out LTV Limits by Occupancy and Unit Count goes row by row.
What If You're Over the Limit?
You have more options than "no." A few that actually move the number:
1. Change the structure. If you don't need cash, a rate-and-term allows far more leverage than a cash-out.
2. Pay down the balance. A lump sum before closing lowers LTV directly.
3. Pay off or close a second lien. Watch the cash-out trigger if it wasn't purchase-money.
4. Wait for equity. Appreciation and regular payments both lower LTV over time.
5. Reduce financed costs. Paying some closing costs out of pocket keeps the balance down.
6. Look at the government streamlines. An existing FHA loan can use the FHA Streamline, with no appraisal and limited credit review. A rate-and-term on an FHA loan with an appraisal reaches 97.75%. An existing VA loan can use the VA IRRRL, with a 0.5% funding fee unless exempt, no VA appraisal and seasoning of the later of 210 days and six payments. Both need a net tangible benefit.
7. Check the jumbo lanes if your balance exceeds the conforming limit. Those programs start at a 660 decision score, reach 90% leverage and go to $5,000,000, with a 50% ratio ceiling on the fixed lanes. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
It's a bigger conversation, and the numbers differ.
Common Mistakes When Estimating Your Number
- Assuming the limit is 80% for everyone. That figure belongs to cash-out on a one-unit primary residence.
- Treating a duplex like a single-family home. For cash-out, the ceiling is lower.
- Ignoring an unused HELOC. For HCLTV, the full line counts.
- Forgetting that closing costs rolled into the loan raise LTV.
- Assuming mortgage insurance falls off at 20% equity. You request cancellation at 80%, and automatic termination comes at 78%.
- Counting on the estimated value instead of the appraised value.
One more thing a working broker sees often. Borrowers fixate on the cap and skip the break-even. A refinance that clears the LTV test can still cost more than it saves, because closing costs are built into the loan balance or the rate. Run the break-even on your own numbers before you chase the highest leverage.
Key Terms Defined
LTV (loan-to-value): The new first mortgage divided by the home's appraised value, shown as a percentage.
CLTV (combined loan-to-value): The first mortgage plus the drawn part of any HELOC and any second mortgage, divided by value.
HCLTV (home equity combined loan-to-value): CLTV, but counting the entire HELOC credit line whether or not you've drawn on it.
Limited cash-out refinance: A refinance that pays off your first mortgage and closing costs with only incidental cash back. Freddie Mac calls it no cash-out.
Cash-out refinance: A refinance that lets you take equity out for any purpose, with a lower LTV ceiling.
Seasoning: The time an existing loan or ownership must be in place before a cash-out refinance is allowed.
Occupancy: How you use the home: principal residence, second home or investment property.
Frequently Asked Questions
What is the maximum LTV for a conventional cash-out refinance?
It is 80% on a one-unit primary residence and 75% on two- to four-unit primary residences. Second homes and investment property also sit at 75%. Credit score, loan type and lender overlays can lower your ceiling, and everything is subject to lender guidelines and full file review.
Can I refinance to 95% or more of my home's value?
Often, yes, on a one-unit primary residence with a rate-and-term refinance. The ceiling is 95%, and it can reach 97% where the existing loan is agency-owned and the first-time-buyer program allows it. Cash-out doesn't get there. It stops at 80%.
Does my HELOC count against the limit even if I haven't used it?
Yes, for HCLTV. The full credit line counts whether or not you've drawn on it. For CLTV, only the drawn balance counts. Closing or paying off the line before the refinance can change the math.
Will I pay mortgage insurance on a refinance?
Above 80% LTV, yes. At 80% or below, generally no. You may request cancellation when the balance reaches 80% of original value, and the servicer must terminate it at 78%. Because a refinance sets a new original value, the clock restarts.
Do closing costs count toward LTV?
Yes, if you finance them. Rolling costs into the new loan raises the balance, which raises LTV. On a file sitting just under a threshold, paying some costs out of pocket can keep you on the right side of it.
Next Step
If you are weighing a refinance and want the break-even run on your own numbers, Lendmire can help you compare the programs on the same home. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit. Programs and figures are subject to lender guidelines and full file review, and nothing here is a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae Selling Guide B2-1.2-01: Loan-to-Value Ratios
2. Fannie Mae Selling Guide B2-1.3-03: Cash-Out Refinance Transactions
3. Fannie Mae Eligibility Matrix
4. Freddie Mac Cash-Out Refinance
5. HCLTV rules
6. CFPB Compliance Bulletin on Private Mortgage Insurance Cancellation and Termination
This article is part of Lendmire’s conventional loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How Much a Refinance Costs vs PMI on a 2-4 Unit Conventional Loan · How to Compare Two Loan Estimates on a Conventional Loan · How to Refinance a Conventional Loan Step by Step
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.